Teresa Martin: Dissatisfaction drives car-rental startups

Car rentals make me crazy. So during my last California trip (in the middle of yet another rental car pull-out-your-hair experience) my eyes couldn’t help but spot San Francisco street spaces reserved for Getaround cars.

“Getaround?” I said as I circled the block in the rental I was cursing, looking for a spot to pause it in for a few moments. Yes, Getaround.

In yet another example of the sharing economy, your personal car can switch from money pit to “disrupting the transportation industry” via this 2011 startup, funded by luminary angels including Ashton Kutcher (actor) and Marissa Mayer (recently departed CEO of Yahoo).

Armed with venture capital and the fun factoid that the average car sits idle 22 hours a day, the founders started building the company in 2011, launched in 2013 and four years later have 200,000 members and tire prints in seven cities: San Francisco; Oakland; Berkeley; Chicago; Portland, Oregon; Washington, D.C.; and Boston.

Car seekers get a local car in a local location, bookable by the hour — $5 and up depending on location. You find your rental via an app on your mobile device, and unlike the mysterious brew of traditional rental pricing schemes, with this service you pretty much know what you are paying for and exactly what vehicle you will be using.

Like other sharing services, trust lies at the center. For Getaround, this means integrating with motor vehicle departments in all 50 states and running a secure driver record check in real time, combined with GPS tracking and the ability to remotely kill the starter.

If your personal car meets the requirements (e.g., clean, recent model year), the company says you can earn an average of $6,000 a year on your car and you don’t need to drive anyone around. In its business model, the company keeps 40 percent of the rental revenue, which covers insurance, roadside assistance, help desk and the like. You pay $20 a month to have the Getaround Connect system installed in your car; this system enables other people to book and find your vehicle.

Of course, if you live in a parking-constrained location such as San Francisco, the best reward might be having dedicated parking — provided as part of the effort to minimize cars and maximize city street space.

Getaround has lots of company. I tripped over another variation on personal car sharing while doing an airport car search — as I vowed to never again use a certain car rental company. Turo, also based in San Francisco, has been around since 2009 and describes itself as a “car rental marketplace where travelers can rent any car they want, wherever they want it, from a vibrant community of local car owners.”

Turo feels a bit like Airbnb on wheels. Guests and owners meet and exchange the car in person. While Getaround focuses on city streets, Turo focuses on airports — and says it has 4,500 cars at 300 airports. Car owners earn money on their vehicles and car renters can pick from vehicles from cost-conscious to the very cool and unique. In fact, finding that just-right vehicle is part of the pitch.

There is money to be had in renting cars. According to Auto Rental News, in 2016 the U.S. car rental fleet numbered more than 2.3 million vehicles and generated $28.4 billion in revenue. In the past decades, the largest companies have consolidated into a top three (Enterprise/Alamo/National, Hertz/Dollar/Thrifty and Avis/Payless) with a number of smaller firms trickling behind.

Despite this flow of dollars, car rentals have been the butt of jokes for decades. Poor service, cars with issues, mysterious and misleading pricing, long lines, lack of ability to follow up with an issues … the list of complaints goes on and on. The final frosting on my cake was being told that I could not put my issues in writing as the company “had no customer support mailing address.”

In the wake of all this consumer dissatisfaction lies opportunity. And the wireless, digital economy, coupled with an emerging generation’s shifted perspective of personal property, means that connections can happen without storefronts and through tools that flex and respond to market need.

The word “disruption” gets tossed around a lot when it comes to technology-enabled business models, but the reality might be a bit more complex. Technology enables a new type of middleman, one that did not so much disrupt as move into a place where the market was already failing.

Pundits often say that the sharing economy disrupts traditional business models, but when you stop and think about it, the sharing economy almost seems a natural outcome of it all, exactly what you would expect to get when you combine a mobile digital ecosystem with dissatisfied consumers with a new source of product providers.

— Teresa Martin lives, breathes and writes about the intersection of technology, business and humanity. Read more of her recent columns at www.capecodtimes.com/teresamartin.

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